UK retail sales made a tentative recovery over the Christmas period, largely thanks to booming online sales.
Although British retail sales saw their largest annual fall in history last year, sales volumes rose 0.3% in December following a 4.1% fall in November when the country’s more relaxed tier restrictions that meant more stores were able to open. According to the Office for National Statistics (ONS), this is 2.7% higher than February’s pre-lockdown level.
Sales were helped by a strong month for clothing stores, which rebounded 21.5%, a high increase for food purchases which rose a massive 79.3% and a record annual increase of 32.0% per cent for non-store purchases.
During December, there was initially a period of eased restrictions early in the month, then tighter restrictions to non-essential retail in England, Scotland and Wales followed. The ONS said that feedback from retailers suggested that these enforced closures later in the month affected turnover, though not to the same extent as witnessed in November.
Certain sectors bucked the trend, including sales of housewares and toys, and retailers operating an online channel managed to enjoy the lion’s share of purchases made.
ONS deputy national statistician for economic statistics Jonathan Athow said: “The increased popularity of click-and-collect and people buying more items from home led to a strong year for overall internet sales, with record highs for food and household goods sales online.”
“Booming online sales meant that retailers who had worked on strengthening their eCommerce capabilities will have reaped the rewards as many consumers completed their holiday shopping from the safety of their own homes,” added Lynda Petherick, head of retail at Accenture UK.
The value of online retail sales jumped by 46.1% in 2020 compared with 2019 – the highest annual growth reported since 2008, demonstrating how the pandemic has changed shopping habits.
Richard Lim, chief executive of Retail Economics, explained that the rise of online had polarised industry performance. “The gap widened between those retailers with the most sophisticated online propositions from those with legacy store-dependent business models,” he said. It remains to be seen if this is a permanent or temporary shift in shopping behaviour.
The recovery in retail sales is expected to be short-lived amid a third lockdown which has seen physical stores forced to close for the foreseeable future, and as we move out of the peak trading season.
However, it is believed that, once physical stores are able to reopen fully, there may be pent up demand that will result in a welcome boom in sales.
“While the online players are benefiting, the high street will be desperate that once the vaccine programme is rolled out and restrictions eased once more, consumers will be ready to spend the money that they have been forced to save in earnest,” said Jon Hudson, Premier Miton’s UK Equity fund manager.